Shares of Acadia Pharmaceuticals Inc. (ACAD) rallied 21.8% in Monday’s extended trading session after the biopharmaceutical company revealed positive top-line results for the Phase 3 Lavender study of its drug, trofinetide, to treat Rett syndrome.
Rett syndrome is a rare, debilitating neurological disorder found primarily in females. It is caused by mutations on the X chromosome on a gene called MECP2. Rett syndrome causes problems in brain function that are responsible for cognitive, sensory, emotional, motor and autonomic function.
Study Findings
The 12-week placebo-controlled study was undertaken on 187 girls and young women aged 5-20 years. The results reflect a statistically significant improvement over placebo for both co-primary endpoints, which included caregiver and physician assessments.
Further, the drug displayed statistically significant separation over placebo on the key secondary endpoint, the Communication and Symbolic Behavior Scales Developmental Profile Infant-Toddler Checklist. (See Acadia stock chart on TipRanks)
However, side effects such as diarrhea and vomiting were witnessed in 17.2% of patients, as compared to 2.1% of patients in the placebo group. Acadia also informed that over 95% of participants have elected to roll over to the Lilac open-label extension study.
Official Comment
The Senior Vice-President, Chief Scientific Officer and Head of Rare Disease at Acadia, Kathie Bishop (Ph.D.), said, “The consistent efficacy across primary and key secondary endpoints in the Lavender study demonstrates the potential of trofinetide to treat Rett syndrome… We look forward to continuing this important work and potentially delivering an FDA-approved treatment for this rare and devastating disease.”
In the first quarter of 2022, Acadia plans to attend a pre-NDA meeting with the U.S. Food and Drug Administration, seeking to submit a New Drug Application around mid-year 2022.
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Stock Rating
Following the news, JMP Securities analyst Jason Butler reiterated a Buy rating on Acadia and raised the price target to $39 (101% upside potential) from $35.
Butler noted, “Positive Phase 3 results for trofinetide in Rett Syndrome appear robust and meaningful, supporting the drug could play an important role in the high unmet need.”
“We now include what we view as a potentially conservative peak U.S. opportunity of ~$400-$500 million as we look to gain additional granularity on the opportunity in coming months, including feedback from prospective prescribers,” the analyst added.
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 3 Buys and 6 Holds. The average Acadia price target of $25.50 implies 31.4% upside potential.
Hedge Fund Trading Activity
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Acadia is currently Neutral, as the cumulative change in holdings across 2 hedge funds that were active in the last quarter was a decrease of 2.3 million shares.
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